Jobs data spark stock rally

EXAMINER NEWS SERVICES

Published 4:00 am, Friday, June 5, 1998

NEW YORK - Stocks bounded higher Friday on a report showing the economy remained surprisingly robust, but with inflation still at bay.

The nation's unemployment rate held at a 28-year low of 4.3 percent in May as the economy churned out nearly 300,000 new jobs, overcoming fallout from Asia's economic turmoil, the Labor Department said Friday.

The seasonally adjusted rate matched April's and was the lowest since February 1970. Many analysts had considered the April rate, down from 4.7 percent in March, a fluke. But Friday's report underscores the labor market's strength.

Wall Street was quick to react. Based on early, unofficial results, the Dow Jones industrial average ended up 167.15 points, or 1.8 percent, at 9,037.71. In the broad market, advances led declines by a 2-to-1 margin on moderate volume of 560 million shares on the New York Stock Exchange.

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An hour before the close of trading, the Standard & Poor's 500 index was up 10.99 at 1,105.82. The NYSE composite index was up 6.17 at 572.52, and the American Stock Exchange composite index was up 2.07 at 711.53.

Nonfarm payrolls grew by 296,000 in May against a revised 302,000 gain in April, with all of the job gains occurring in service-producing areas of the economy.

The other piece of good news was that average hourly earnings rose 4 cents following an increase of 6 cents in April. Over the past year, hourly earnings were up by 4.3 percent.

Many analysts had thought the April jobless rate was a fluke, but the May figure confirmed the continuation of the strong labor conditions that could force companies to boost wages and prices.

The strength in payroll and wage levels - two major forces behind inflation - may eventually prompt the Federal Reserve to slow the economy with higher interest rates.

But investors shrugged off concerns of a rate hike, with the strong jobs report improving the outlook for corporate profits.

Gap Inc. shares rose nearly 5 percent Friday, setting a 52-week high for the second straight day after the company reported strong same-store sales.

In late afternoon trading on the New York Stock Exchange, Gap stock was at 59, up 2-1/2. The previous year high of 567 / 16 was set Thursday, when the stock gained 3.9 percent. Early Thursday, Gap said May same-store sales rose 24 percent, and total sales for the month increased 47 percent.